With the real estate industry continuing to thrive in Los Angeles and other parts of California, some investors might be wondering what in particular is triggering the growth of the industry. Experts say that tax reform may be a major contributing factor to the increase in transactions involving properties featuring commercial leases. Here is a look at how specifically tax reform is affecting the commercial real estate industry.
The truth is, tax reform in 2018 is expected to continue to fuel overall economic growth throughout the United States, and because the commercial real estate industry is part of this, tax reform should definitely drive revenue growth for property owners in the coming months. This is especially the case since tax rates that are lower typically lead to higher returns. As an example, the new 20 percent deduction for today’s pass-through entities is expected to make properties smarter investments for people who are seeking cash flow.
Another reason that the real estate industry is flourishing is that investors may continue to engage in 1031 exchanges. These types of exchanges defer the capital gains taxes typically assessed on properties that investors exchange for others. In addition, investors have the opportunity to receive favorable tax treatment these days if they invest in communities that are distressed, also known as opportunity zones.
Due to the impact that tax reform is having on the commercial real estate world, it might be a wise move for investors to further explore properties that may be worth investing in. Of course, this may seem like a tall order for those who have little experience in the industry. However, an attorney in Los Angeles can walk investors through the process of purchasing properties featuring commercial leases, making sure that their rights and best interests are protected each step of the way.